10.2 Fraud Investigation, Payment Recovery, and Sanctions

Lead Agencies must have the necessary controls to identify fraud and other program violations to ensure program integrity. Program violations can include both intentional and unintentional client and/or provider violations, as defined by the Lead Agency. These violations and errors, identified through the error-rate review process and other review processes, may result in payment or nonpayment (administrative) errors and may or may not be the result of fraud, based on the Lead Agency definition. 10.2.1 Strategies used to identify and prevent program violations Check the activities the Lead Agency employs to ensure program integrity, and for each checked activity, identify what type of program violations the activity addresses, describe the activity and the results of these activities based on the most recent analysis. a. [x] Share/match data from other programs (e.g., TANF program, Child and Adult Care Food Program, Food and Nutrition Service (FNS), Medicaid) or other databases (e.g., State Directory of New Hires, Social Security Administration, Public Assistance Reporting Information System (PARIS)). i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: A cross-check between TANF data and ECECD’s database system, EPICS, is performed to identify matching records. In the event of an intentional program violation, ECECD protocol entails the following steps: First, ECECD will promptly notify the oversight agency about the violation. Second, ECECD conducts a thorough audit to assess the situation, either internally or through an external auditor. ECECD will then integrate the recommended actions and activities provided to address the violation effectively. Following this, a comprehensive analysis is conducted, focusing on both the individual responsible for the program breach and the program itself, encompassing all past and future actions. Finally, to ensure accuracy and compliance, ECECD conducts a final review process where each aspect is carefully examined by two separate individuals. This approach ensures accountability and facilitates corrective measures in response to intentional violations of the program. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ECECD thoroughly evaluates the nature of the infraction when inadvertent or unintentional violations occur. ECECD pinpoints the requisite corrective measures and promptly informs the appropriate parties. Additionally, ECECD ensures that its reports are promptly updated to accurately reflect these measures and maintain transparency. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice:: ECECD collaborates with its federal partners and seeks technical assistance in the event of an error to ensure that the appropriate steps are taken to mitigate the error and ensure that it does not occur again. ECECD also formulates a plan to effectively communicate this information to program staff to avoid future errors or anomalies. b. [x] Run system reports that flag errors (include types). i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ECECD runs system reports that identify program violations through comprehensive audits covering 100% of Child Care assistance payments before any provider payments are disbursed. ECECD uses the following methods to conduct the Child Care Assistance Payment Audits: (a) Generate a 'Pending Payment Report' that will identify 100 percent of all Child Care Assistance Payments with a payment status of ￿issue payment;￿ (b) Detect duplicate payments by generating an exception report. The exception report will identify all payments that have duplicate service dates, duplicate provider, duplicate applicant and duplicate child. To identify intentional program violations that could result in an overpayment, the report will cross check payments; (c) Program violations that could result from manual entries are reviewed to ensure payment request and the data entry of dollar amount and service dates are justified by the Eligibility Interviewer’s narrative; (d) EPICS has integrated functionalities that only allow for one monthly payment per service. This is to ensure payments do not exceed a full-time placement per child and or would not exceed the highest differential payment; (e) Questionable payments found during the audit process are verified by Child Care program supervisors and, if appropriate, approved by them; (f) Encourage Child Care supervisors to report program violations where child care payments were issued incorrectly. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ECECD runs system reports that identify program violations through comprehensive audits covering 100 percent of Child Care assistance payments before any provider payments are disbursed. The methods to conduct the Child Care Assistance Payment Audits are as follows: (a) Generate a 'Pending Payment Report' that will identify 100 percent of all Child Care Assistance Payments with a payment status of ￿issue payment;￿ (b) Detect duplicate payments by generating an exception report. The exception report will identify all payments that have duplicate service dates, duplicate provider, duplicate applicant and duplicate child. To identify intentional program violations that could result in an overpayment, the report will cross check payments; (c) Program violations that could result from manual entries are reviewed to ensure payment request and the data entry of dollar amount and service dates are justified by the Eligibility Interviewer’s narrative; (d) EPICS has integrated functionalities that only allow for one monthly payment per service. This is to ensure payments do not exceed a full-time placement per child and or would not exceed the highest differential payment; (e) Questionable payments found during the audit process are verified by Child Care program supervisors and, if appropriate, approved by them; (f) Encourage Child Care supervisors to report program violations where child care payments were issued incorrectly. These auditing procedures are instrumental in maintaining program integrity and ensuring compliance with regulatory standards. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: ECECD’s Payment Audit team conducts regular internal audits of Child Care Assistance payments to ensure accuracy and compliance. Our auditing procedures include thorough reviews of manual payment entries, known as One Time Only Payments. ECECD’s Payment Audit team promptly halt any flagged entries and notify internal staff of errors to prevent improper payments. Effective communication between ECECD Child Care Licensing and Eligibility Interviewers is prioritized to minimize errors in compensating providers at incorrect star level rates. This proactive approach ensures that staff are well-informed about updates, and thereby reduces payment calculation errors. ECECD also encourages timely submission of payment pull requests. These comprehensive measures minimize errors and ensure accurate payments to providers. c. [x] Review enrollment documents and attendance or billing records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: For intentional program violations, ECECD staff monitors attendance records, the child care placement agreement and billing records at any time during the certification period or on a case-by-case basis to ensure payment accuracy. Providers who do not comply with this requirement are sanctioned and may be subject to recoupment or disallowance of payments. These steps ensure that the providers are better informed and are in alignment with CCDF requirements. In addition, the Enterprise Provider Information and Constituent Services (EPICS) system has internal functionalities embedded in it and prohibits eligibility workers from making many of the most common administrative errors. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: If ECECD encounters unintentional program violations, the staff reviews enrollment documents and attendance or billing records and compares them with child care placement agreement to identify improper payments. For example, if the provider fails to notify ECECD of the child’s non-attendance for 14 consecutive days or longer, the provider will be paid through the last date of attendance. Providers who do not comply with this requirement are sanctioned and may be subject to recoupment or disallowance of payments. These steps ensure that the providers are better informed and are in alignment with the CCDF requirements. In addition, ECECD's EPICS system has internal functionalities embedded in it and prohibits Eligibility Interviewers from making administrative errors. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: ECECD’s EPICS system has internal functionalities in place to mitigate errors by its Eligibility Interviewers. These updates ensure that eligibility determinations are solely based on accurate data entered by the Eligibility Interviewers. Systematic checks have been integrated into EPICS to validate the information entered by staff. This not only streamlines the process but also increases the accuracy in eligibility assessments. d. [x] Conduct supervisory staff reviews or quality assurance reviews. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ECECD’s EPICS system has internal functionalities in place to mitigate intentional program violations. These updates ensure that eligibility determinations are solely based on accurate data entered by staff. Systematic checks have been integrated into EPICS to validate the information entered by staff. This not only streamlines the process but also upholds accuracy in eligibility assessments. Supervisors for ECECD’s Child Care Assistance team, Administrative Services Division (ASD), and other program staff review instances of intentional program violations to ensure that ECECD is effectively addressing the issue, mitigating future risk, and making any necessary policy or procedure changes. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: ECECD’s EPICS system has internal functionalities in place to mitigate unintentional program violations. These updates ensure that eligibility determinations are solely based on accurate data entered by staff. Systematic checks have been integrated into EPICS to validate the information entered by staff. This not only streamlines the process but also upholds accuracy in eligibility assessments. Supervisors for ECECD’s Child Care Assistance team, Administrative Services Division (ASD), and other program staff review instances of unintentional program violations to ensure that ECECD is effectively addressing the issue, mitigating future risk, and making any necessary policy or procedure changes. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: ECECD’s EPICS system has internal functionalities in place to mitigate errors made by its Eligibility Interviewers or other staff. These updates ensure that eligibility determinations are solely based on accurate data entered by staff. Systematic checks have been integrated into EPICS to validate the information entered by staff. This not only streamlines the process but also upholds accuracy in eligibility assessments. Supervisors for ECECD’s Child Care Assistance team, Administrative Services Division (ASD), and other program staff review instances of agency errors to ensure that ECECD is effectively addressing the issue, mitigating future risk, and making any necessary policy or procedure changes. e. [x] Audit provider records. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: In the event of an intentional program violation, ECECD would inform the oversight agency, perform its own audit, integrate the actions and activities recommended by the external auditor, and further assess related past and future actions to see where any improvements or changes should be made and then address the specific issue with the provider. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: In the event of unintentional program violations, ECECD would review the type of violation, and determine the appropriate response necessary, as well as inform the necessary individuals and update any reports accordingly. ECECD would also address the issue with the provider to ensure that steps are taken to educate the provider and avoid any repeated unintentional program violations. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: If ECECD were to have an error, ECECD would work with its federal partners and seek technical assistance to ensure that ECECD has the necessary knowledge to fix the error and ensure it does not occur again in the future. f. [x] Train staff on policy and/or audits. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The ECECD Child Care Assistance program provides regular training sessions to staff members, ensuring that they stay current on policy changes, program requirements, and integrity standards. In addition, the ECECD Quality Assurance team conducts training to keep staff informed about policy updates, program integrity requirements, and procedures. These trainings promote effective communication and collaboration. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: The ECECD Child Care Assistance program provides regular training sessions to staff members, ensuring that they stay current on policy changes, program requirements, and integrity standards. In addition, the ECECD Quality Assurance team conducts trainings to keep staff informed about policy updates, program integrity requirements, and procedures. These trainings promote effective communication and collaboration. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: The ECECD Child Care Assistance program provides regular training sessions to staff members, ensuring that they stay current on policy changes, program requirements, and integrity standards. In addition, the ECECD Quality Assurance team conducts trainings to keep staff informed about policy updates, program integrity requirements, and procedures. These trainings promote effective communication and collaboration. g. [x] Other. Describe the activity(ies): ECECD collaborates with federal and state contacts, referencing guidelines to ensure that protocols for addressing violations are completed promptly. i. [x] Intentional program violations. Describe the activities, the results of these activities, and how they inform better practice: In the event of an intentional program violation, ECECD protocol entails the following steps: First, ECECD will promptly notify the oversight agency about the violation. Second, ECECD conducts a thorough audit to assess the situation. ECECD will then integrate the recommended actions and activities provided by the internal or external auditors to address the violation effectively. Following this, a comprehensive analysis is conducted, focusing on both the individual responsible for the program breach and the program itself, encompassing all past and future actions. Finally, to ensure accuracy and compliance, ECECD conducts a final review process where each aspect of the program violation is carefully examined by two separate individuals. This approach ensures accountability and facilitates corrective measures in response to intentional violations of the program. ii. [x] Unintentional program violations. Describe the activities, the results of these activities, and how they inform better practice: In the event of unintentional program violations, ECECD would review the type of violation and determine the appropriate development needed, as well as inform the necessary individuals and update reports accordingly. iii. [x] Agency errors. Describe the activities, the results of these activities, and how they inform better practice: Should ECECD encounter an error, the agency would work with its federal partners and seek technical assistance to gather the necessary expertise. Following this, ECECD would devise a comprehensive plan to communicate and disseminate the acquired information across the program effectively and make any necessary policy or procedure changes. 10.2.2 Identification and recovery of misspent funds Lead Agencies must identify and recover misspent funds that are a result of fraud, and they have the option to recover any misspent funds that are a result of unintentional program violations or agency errors. a. Identify which agency is responsible for pursuing fraud and overpayments (e.g., State Office of the Inspector General, State Attorney): In the event ECECD identifies an instance of misspent funds resulting in fraud, ECECD will report it to the New Mexico Office of the State Auditor (OSA). OSA plays a crucial role in overseeing various government financial activities. Depending on the specifics or situation, the State Office of the Inspector General and the New Mexico Office of the Attorney General may become involved, following the guidance provided by OSA as well as the ECECD Office of General Counsel. b. Check and describe all activities, including the results of such activity, that the Lead Agency uses to investigate and recover improper payments due to fraud. Consider in your response potential fraud committed by providers, clients, staff, vendors, and contractors. Include in the description how each activity assists in the investigation and recovery of improper payment due to fraud or intentional program violations. Activities can include, but are not limited to, the following: i. [ ] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: ECECD requires child care providers to enter into repayment plans when the provider has misspent or otherwise misused CCDF or state funds. To ensure the feasibility of the provider completing the repayment plan, ECECD first consults with the provider and then offers a reasonable repayment plan. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: If a need arises, ECECD would consult with the provider determine the feasibility of reduced payments in subsequent months and formulate reasonable plan to reduce future payments until misspent funds are recovered. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [x] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: Currently, ECECD has a Payment Audit team that investigates potential improper payments both before and after they may be issued. This team also stops improper payments in the process of being issued to providers to ensure the financial integrity of CCDF and state funds. This team diligently examines transactions, identifies irregularities, and takes corrective actions. Through rigorous analysis and collaboration, the Payment Audit team strives to minimize financial losses and enhance transparency in government operations. viii. [ ] Other. Describe the activities and the results of these activities: c. Does the Lead Agency investigate and recover improper payments due to unintentional program violations? [ ] No. [x] Yes. If yes, check and describe below any activities that the Lead Agency will use to investigate and recover improper payments due to unintentional program violations. Include in the description how each activity assists in the investigation and recovery of improper payments due to unintentional program violations. Include a description of the results of such activity. i. [ ] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: ECECD requires child care providers to enter into repayment plans when the provider has misspent or otherwise unintentionally misused CCDF or state funds. To ensure the feasibility of the provider completing the repayment plan, ECECD first consults with the provider and then offers a reasonable repayment plan. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: If a need arises, ECECD would consult with the provider determine the feasibility of reduced payments in subsequent months and formulate reasonable plan to reduce future payments until misspent funds are recovered. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ] Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [x] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: Currently, ECECD has a team that actively functions with the sole purpose of addressing improper payments and conducting thorough investigations. It is dedicated to addressing the collection of improper payments and ensuring financial integrity. The team diligently examines transactions, identifies irregularities, and takes corrective actions. This work contributes significantly to safeguarding public funds and maintaining accountability. Through rigorous analysis and collaboration, the team strives to minimize financial losses and enhance transparency in government operations. viii. [ ] Other. Describe the activities and the results of these activities: d. Does the Lead Agency investigate and recover improper payments due to agency errors? [ ] No. [x] Yes. If yes, check and describe all activities that the Lead Agency will use to investigate and recover improper payments due to agency errors. Include in the description how each activity assists in the investigation and recovery of improper payments due to administrative errors. Include a description of the results of such activity. i. [ ] Require recovery after a minimum dollar amount of an improper payment and identify the minimum dollar amount. Describe the activities and the results of these activities based on the most recent analysis: ii. [ ] Coordinate with and refer to the other State/Territory agencies (e.g., State/Territory collection agency, law enforcement agency). Describe the activities and the results of these activities based on the most recent analysis: iii. [x] Recover through repayment plans. Describe the activities and the results of these activities based on the most recent analysis: ECECD requires child care providers to enter into repayment plans when the agency has made an error with respect to CCDF funds. To ensure the feasibility of the provider completing the repayment plan, ECECD first consults with the provider and then offers a reasonable repayment plan. iv. [x] Reduce payments in subsequent months. Describe the activities and the results of these activities based on the most recent analysis: If ECECD makes an error, ECECD would consult with the provider determine the feasibility of reduced payments in subsequent months and formulate reasonable plan to reduce future payments until funds are recovered. v. [ ] Recover through State/Territory tax intercepts. Describe the activities and the results of these activities based on the most recent analysis: vi. [ ]Recover through other means. Describe the activities and the results of these activities based on the most recent analysis: vii. [x] Establish a unit to investigate and collect improper payments and describe the composition of the unit. Describe the activities and the results of these activities based on the most recent analysis: Currently, ECECD has a team that actively functions with the sole purpose of addressing improper payments and conducting thorough investigations. It is dedicated to addressing the collection of improper payments and ensuring financial integrity. The team diligently examines transactions, identifies irregularities, and takes corrective actions. This work contributes significantly to safeguarding public funds and maintaining accountability. Through rigorous analysis and collaboration, they strive to minimize financial losses and enhance transparency in government operations. viii. [ ] Other. Describe the activities and the results of these activities: e. What type of sanction will the Lead Agency place on clients and providers to help reduce improper payments due to intentional program violations or fraud? Check and describe all that apply: i. [x] Disqualify the client. Describe this process, including a description of the appeal process for clients who are disqualified. Describe the activities and the results of these activities based on the most recent analysis: In cases where ECECD substantiates fraud, ECECD may disqualify a client until their debt has been paid in full. Clients who have been sanctioned or disqualified from the program may request a fair hearing in front of an impartial hearing officer. The request for a fair hearing must be made in writing within 30 calendar days from the date ECECD took the adverse action affecting the client’s benefits. ECECD reviews the request for a hearing and consults with the client to determine if the matter can be resolved without proceeding to a fair hearing. If the matter cannot be resolved without a fair hearing, ECECD conducts the fair hearing within 60 calendar days of receipt of the letter requesting the hearing and notifies the client of the date of the hearing no less than 14 calendar days prior to the hearing. The location of the hearing must be easily accessible to the claimant. Conducting the fair hearing by telephone or video conferencing is permitted. If the decision is in favor of ECECD, the client is responsible for repayment of all monies received to which the client was not entitled, unless the hearing decision provides otherwise, or the ECECD Early Childhood Services Director authorizes otherwise in exceptional circumstances. ii. [x]Disqualify the provider. Describe this process, including a description of the appeal process for providers who are disqualified. Describe the activities and the results of these activities based on the most recent analysis: In cases where ECECD substantiates fraud, ECECD may disqualify a provider until their debt has been paid in full. Providers who have been sanctioned or disqualified from the program may request a fair hearing in front of an impartial hearing officer. The request for a fair hearing must be made in writing within 30 calendar days from the date ECECD took the adverse action affecting the provider’s benefits. ECECD reviews the request for a hearing and consults with the provider to determine if the matter can be resolved without proceeding to a fair hearing. If the matter cannot be resolved without a fair hearing, ECECD conducts the fair hearing within 60 calendar days of receipt of the letter requesting the hearing and notifies the provider of the date of the hearing no less than 14 calendar days prior to the hearing. The location of the hearing must be easily accessible to the provider. Conducting the fair hearing by telephone or video conferencing is permitted. If the decision is in favor of ECECD, the provider is responsible for repayment of all monies received to which the provider was not entitled, unless the hearing decision provides otherwise, or the ECECD Early Childhood Services Director authorizes otherwise in exceptional circumstances. iii. [ ] Prosecute criminally. Describe the activities and the results of these activities based on the most recent analysis: iv. [x] Other. Describe the activities and the results of these activities based on the most recent analysis: In the event ECECD identifies a misspending of funds resulting in fraud, ECECD will report it to the Office of the State Auditor (OSA). OSA plays a crucial role in overseeing various activities. Depending on the specific action or situation, the State Office of the Inspector General and the Office of Attorney General become involved, following the guidance provided by OSA and ECECD’s Office of General Counsel. Appendix 1: Lead Agency Implementation Plan The Appendix will be available for Lead Agencies to use in CARS after the Plan approval letter is issued. For each non-compliance, Lead Agencies must describe the following: • Action Steps: List the action steps needed to correct the finding (e.g., update policy manual, legislative approval, IT system changes, etc.). For each action step list the: o Responsible Entity: Indicate the entity (e.g., agency, team, etc.) responsible for completing the action step. o Expected Completion Date: List the expected completion date for the action step. • Overall Target Date for Compliance: List date Lead Agency anticipates completing implementation, achieving full compliance with all aspects of the findings. (Note: Compliance will not be determined until the FFY 2025-2027 CCDF Plan is amended and approved). Appendix 1: Form [Plan question with non-compliance and associated provision will pre-populate based on preliminary notice of non-compliance] A. Action Steps for Implementation B. Responsible Entity(ies) C. Expected Completion Date Step 1: Step 2 (as necessary): [Additional steps added as necessary] Overall Target Date for Compliance: